"Investors continue to keep a weather eye on the trade war situation," said IG analyst Chris Beauchamp.

"But even without any further meaningful headlines on this front, the upcoming Fed meeting...means that most are content to await developments rather than rushing in to try and join in the general bounce in equities seen over the past week."

Analysts view the Fed as almost certain to lift interest rates again on Wednesday but are watching for the US central bank's outline of additional interest rate hikes down the road.

"Maybe we're at the moment where the Fed will be thinking about pausing because there is some question about the medium-term outlook," said Isabelle Mateos y Lago, global macro strategist at BlackRock Investment Institute.

Others think the Fed is unlikely to signal a change in the pace of interest rate increases but that this could change in the near term, as policymakers take a more hawkish view of economic trends.

Oil boost

Brent oil rebounded, finishing up 67 cents per barrel at $81.87, on worries over stretched global supplies due to US sanctions on Iran.

"Brent crude hit a level not seen since late 2014 and that underlines how bullish the sentiment is," said market analyst David Madden at CMC Markets UK.

Energy firms enjoyed big gains on this week's surge in oil prices, after the world's top producers agreed to maintain output despite pressure from US President Donald Trump.

Trump, in a combative appearance at the United Nations Tuesday, called for Iran's international isolation, prompting accusations from his Iranian counterpart that Trump was trying to topple the Iranian government.

Shares in BP climbed nearly 3 percent, while those in Shell rose 2.4 percent in London. In Paris, shares in Total added 1.3 percent. Most leading US petroleum-linked stocks also rose, including Schlumberger, which won 1.5 percent.

Next please

In London, shares in clothing retail chain Next soared almost 10 percent, despite a warning over the risks of port delays and increased tariffs from a possible no-deal Brexit. They closed with a gain of 7.8 percent.

The group also insisted that the direct risks of a no-deal scenario did not pose a "material threat to the ongoing operations and profitability of Next's business."

Investors focused on positive news that Next upped its full-year profits outlook after a bright first half.

Michael Kors Holdings rose two percent after announcing it was buying Italian fashion house Versace for $2.1 billion and saying it would rename itself Capri Holdings.